Heartland Bank's credit rating – what is it and what does it mean?
Heartland Bank has a credit rating of BBB- (Outlook Negative).
The rating, which is a statement of the creditworthiness of Heartland Bank, has been provided by Standard & Poor's (S&P).
Heartland Bank's rating is a 'long term issuer' rating which reflects Heartland Bank's creditworthiness over a time period of one year or more. The rating also assesses Heartland Bank's capacity to repay in New Zealand dollars.
What does a BBB- rating mean?
The BBB- rating means Heartland Bank is considered to have adequate capacity to meet its financial commitments. However, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity of the obligor to meet its financial commitments.
What is a credit rating?
A credit rating is a rating agency's opinion of an institution's ability to pay back in full and on time all the money they have promised an investor. In Heartland Bank's case, this is the funds its investors have placed with it.
Credit ratings are based on detailed research and analysis by a ratings agency, which takes into account the financial history and current financial position of the institution. Ratings are continuously reviewed, although most ratings are subject to annual review.
What is the scale used for credit ratings?
Generally a lower credit rating indicates a higher risk that an institution will 'default' and an investor will not get their money back in full and/or on time as promised. The S&P rating scale is shown below. Heartland Bank's BBB- rating sits in the 'BBB Adequate' part of the scale.
||Currently Highly Vulnerable
|Capacity to make timely payments
||Vulnerability to non-payment
Source: adapted from Reserve Bank of New Zealand 'Know your credit rating' document March 2010.
Ratings between AA and CCC may be modified by the addition of a plus (+) or minus (-) sign to show relative standing within the major rating categories.
An S&P rating may also include an "outlook" assessment. An outlook assessment considers the potential direction of a long-term credit rating over the intermediate term (typically six months to two years). An outlook assessment is not necessarily a precursor of a rating change. The common rating outlook definitions are: Positive - means that a rating may be raised; Negative - means that a rating may be lowered; Stable - means that a rating is not likely to change; and Developing - means a rating may be raised or lowered.
Where can I find more information?
- You can find out more information about Heartland Bank in our Disclosure Statement or one of our Investment Statements by clicking here, or by calling 0800 85 20 20 to talk to our investment team.
- The Reserve Bank has some useful information on credit ratings on its website - http://www.rbnz.govt.nz/.
- Additional information can also be found on S&P's website – http://www.standardandpoors.com/.
- Investors may also wish to engage a financial adviser for independent advice and Heartland Bank encourages you to do so. On the first page of Heartland Bank's Investment Statements you'll find information on engaging a financial adviser.
If you have any questions regarding the above disclosure, call our Investment Team on 0800 85 20 20. We are here to help.
Note. Credit ratings are only one tool in assessing risk, and the Reserve Bank advises investors to seek more information on making wise investment decisions. Ratings may be changed, withdrawn or suspended by S&P at any time.